Stephen C. Shannon, DO, MPH

How Will Our Nation’s Fiscal Debt and Sequestration Affect Osteopathic Medical Education?

Two major fiscal issues are looming on the near horizon that will impact osteopathic medical education (OME). One of those is the need for annual funding through the appropriations process; the other is the need to address “sequestration,” an across-the-board funding cut that will occur on January 2, 2013 – absent congressional action – as a result of the failure of Congress to meet the requirements of the Budget Control Act (BCA) of 2011 to reduce the deficit. 

While it is difficult to ascertain specifically the “When” and “How Much” of the impact of the combined challenges, there seems little chance that “business as usual” will not be affected. Therefore, much of AACOM’s advocacy efforts are necessarily devoted to ensuring that the spending cuts ultimately implemented do as little damage as possible to the ability of osteopathic medical education to produce the physicians needed to support the health of the nation’s population. The quality and quantity of education of physicians and of all health professionals will be affected by the decisions made by policy makers dealing with the fiscal crisis in the coming months.

In September, Congress enacted a six-month stop-gap bill that averted a federal government shutdown and continued funding the federal government until March 2013. Tough choices on the deficit and approaches to deal with it will continue to be debated by Congress and the Administration. Serious action on this issue will not occur until after the upcoming elections. 

As noted above, on January 2, 2013, barring congressional action, major funding cuts to federal programs critical to OME will take place under sequestration, a mandated, across-the-board cut resulting from the failure of last year’s Joint Select Committee on Deficit Reduction (created by the BCA) to put forth recommendations to Congress on deficit reduction. Add to that the $1 trillion in cuts over ten years already included through discretionary caps imposed by the BCA, and the nation’s federally funded programs are facing a perfect storm of epic economic proportions. So, how would all of this impact programs that are most important to OME?

Some of what we know is factual, and some is conjectural at this point. Medicare, for example, would be cut under the BCA.  However, the reduction is limited to 2 percent, and the law directs that the reduction come from “providers,” not beneficiaries. While details are not yet available, the statutory language is likely to be interpreted to mean that, for example, co-pays and deductibles on beneficiaries could not be reduced, but that hospital and physician reimbursement must be cut—and this would likely include graduate medical education (GME). What is 2 percent of Medicare? Over the ten-year life of the BCA, that totals approximately $110 billion. Without clear indication as to where those funds would come from, the impact from potential cuts under sequestration could significantly threaten GME and/or other areas affecting the delivery of critical patient care. 

In addition, under the BCA, non-defense discretionary (NDD) programs are facing an 8.4 percent cut to program funding levels. NDD programs are core functions government provides for the benefit of all, including medical and scientific research; education and job training, including health professions training; public health, infrastructure; public safety and law enforcement; environmental protection; natural and cultural resources; housing and social services; and international relations.

The Office of Management and Budget (OMB) recently reported that the U.S. Department of Health and Human Services, Health Services and Resources Administration (HRSA), would see its funding decreased by more than $600 million, jeopardizing an array of health professions training programs that benefit osteopathic medical students, including Title VII programs, the National Health Service Corps (NHSC), Community Health Centers and others.  Furthermore, cuts to HRSA’s Title VII health professions programs related to primary care training would shrink an already inadequately funded program and make it even smaller. 

More specifically, according to the OMB, a projected 7.6 percent cut in NHSC funding could result in far fewer scholarships and loan repayment awards in FY2013.  While osteopathic medical students accounted for 20 percent of all U.S. medical students in 2011, they received 40 percent of all NHSC physician scholarships. (See the related article previously published in Inside OME.)

Sequestration would also drastically impact the National Institutes of Health (NIH), which supports researchers in every state across the nation and in many colleges of osteopathic medicine (COMs).  These cuts could total $2.5 billion and impact currently funded programs, as well as reduce or eliminate new requests for proposals in important areas of research. Cuts to the NIH will stifle medical discoveries that save lives and drive our economy.  NIH has recently stated that 2,300 of the new grants it plans to issue in 2013 would not be funded should sequestration take effect.

Among the other federal agencies and programs important to OME that would be cut by sequestration are the Agency for Healthcare Research and Quality, the Centers for Disease Control and Prevention, the Office of Rural Health Policy at HRSA, the Substance Abuse and Mental Health Services Administration, and many of the programs at the U.S. Department of Education.  All of these agencies may experience across-the-board cuts of up to 8.4 percent. Cuts to the Indian Health Services will be limited to 2 percent.

AACOM continues to educate policy makers on the impact these cuts will have on the nation’s COMs, and consistently works to ensure that OME is at the forefront of policy discussions dealing with the federal deficit and sequestration.  I urge you to stand with AACOM in calling on Congress to put aside partisanship and consider a common-sense, balanced approach to dealing with our nation’s deficit, and not sacrifice funding for medical education in the process. It is critical in this election year to make our unified voice heard.


Inside OME Header
October 2012
Vol. 6, No. 10